JERUSALEM : Israel has approved plans for more than 200 new settler homes in the occupied West Bank, adding to a sharp increase in settlement projects so far this year, Israeli campaigners said Thursday.

Israel's government disputed the claim, saying nearly all approvals involved "upgrading existing structures" and not new construction, without providing a more detailed breakdown.

Settlements are considered illegal under international law and are seen as major stumbling blocks to peace efforts since they are built on land the Palestinians see as part of their future state.

Hagit Ofran, a spokeswoman for settlement watchdog Peace Now, said the government had given the green light for at least 229 new homes, which are at various stages in the technical process.

The new units were also reported by Israeli newspapers.

The projects must pass through five administrative stages before winning final approval from Defence Minister Moshe Yaalon.

An Israeli government statement said Prime Minister Benjamin Netanyahu and Yaalon had "not approved new construction." "Almost all of the permits are for upgrading existing structures," it said.

"The small proportion of them pertaining to new construction are for the community of Ganei Modiin, which abuts the fence and which will be part of Israel in any future agreement."

Peace Now said this week that the number of West Bank settlements Israel plans to build more than tripled in the first quarter of 2016 compared to the same period last year.

Between January and March, projects for 674 housing units passed at least one of the steps in the planning approval process, up from 194 in the first quarter of 2015, it said.

The new plans would bring the total to at least 903.

"This policy is killing the two-state solution," Ofran told AFP.

The United States and the European Union, among others, have strongly criticised Israeli settlement construction.

Palestine Liberation Organisation secretary general Saeb Erekat said in a statement that "the continued Israeli colonisation of Palestine is a war crime under international law."

According to Peace Now and Israeli media, the new plans call for additional homes in a range of settlements.

They include Har Brakha (54 units) near Nablus in the northern West Bank; Revava (17), also in the northern West Bank; Ganei Modiin (48), northwest of Jerusalem; Tekoa (34), south of Jerusalem; and Givat Zeev (76), north of Jerusalem.

Some 2.8 million Palestinians live in the West Bank and annexed east Jerusalem in near constant tension with more than 500,000 Israeli settlers.

Meanwhile, Israeli forces raided a money changer in the Palestinian political capital Ramallah early on Thursday, blowing up a safe and sparking a fire, which led to minor clashes, the army and witnesses said.

An Israeli army spokeswoman said the pre-dawn raid was to "confiscate terror funds" held in the shop in the occupied West Bank.

She said the money changer "failed to comply with the army instructions to open the safe," and so "the soldiers proceeded to a controlled detonation of the safe."

The resulting fire spread to the nearby vegetable market before being extinguished, witnesses said.

Following the explosion, there were minor clashes between Israeli soldiers and Palestinians near al-Manara Square in central Ramallah. There were no reports of injuries.

One witness said the forces arrived with the owner of the store, whom he identified as Ghazi al-Ajouli.

"They went in and took the money. After taking the money they went out and detonated the store and then a fire started," the man who gave his name as Mohammed told AFP. "Thank God people are safe," he added.

Ramallah, home to the Palestinian Authority, is under complete Palestinian control as stipulated by the Oslo peace agreements of the early 1990s.

A spokesman for Palestinian prime minister Rami Hamdallah's office condemned what he said was Israel's violation of agreements.

"(Israel) continues its incursions into Palestinian areas, affecting the population, including putting them in danger," Jamal Dajani told AFP.

Israeli forces last month raided the Ramallah offices of a Palestinian television station, accusing it of incitement.